ASEAN urged to renegotiate trade with US

Southeast Asian economies will need to renegotiate their trade deals with the United States to mitigate any long-term repercussions from the US plan to impose reciprocal tariffs on trading partners, analysts said.

US President Donald Trump on Thursday signed a memorandum directing his administration to determine "the equivalent of a reciprocal tariff with respect to each foreign trading partner".

Most of the members of the Association of Southeast Asian Nations have export-dependent economies and count the US, the world's biggest importer, among their key export markets. But Nomura analysts said in their research note that while Thailand, with higher relative tariff rates on US exports, faces the risk of higher reciprocal tariffs, it is not the case for Indonesia, the Philippines and Singapore.

Nomura said Thailand has a "large exposure" to the two sectors most vulnerable to reciprocal tariffs: agriculture and transport. Thailand's agricultural exports to the US comprise 0.8 percent of its GDP while transport products comprise another 0.5 percent. In contrast, Indonesia's export of transport products to the US accounts for 0.02 percent of its GDP.

"We expect Asian economies to step up their negotiations with Trump," Nomura analysts said. But they noted that while reciprocal tariffs are "less of a risk" to developed economies like Singapore, these economies "could still be caught in Trump's tariff net, if it is expanded to include pharmaceuticals, semiconductors, or if the (free trade agreements) are renegotiated".

Pongsarun Assawachaisophon, deputy secretary-general to Thai Prime Minister Paetongtarn Shinawatra, told Bloomberg News on Feb 4 that the government has asked Thai petrochemical companies to increase the purchase of US ethane by at least 1 million tons. He said Thailand is "being proactive and hopes that we can leverage this in our talks with the US".

Wichai Kinchong Choi, a business development expert at the Bangkok-based Kasikornbank, said Thai exporters will need to be ready for the negative impact caused by the tariff increase. He said the Thai government "must try harder" to diversify the country's export markets and explore new business opportunities in other regions like the Middle East and Africa.

"Fortunately, in the past few years, China has become the major market for many Thai export goods. As China has become the biggest trading partner of Thailand, Sino-Thai trades are expected to grow further in the near future thanks to the vast, open and resilient China market," Choi said.

In Vietnam, the country's Trade Minister Nguyen Hong Dien said on Friday the country is ready to open its market and import more agricultural products from the US.

Adam McCarty, chief economist of consultancy Mekong Economics in Hanoi, said it is important for Vietnam to understand the peculiar economics of Trump and his team — in terms of their concerns on trade balance.

Quick response needed

He said it is necessary for the Vietnamese government to respond quickly to Trump's tariff plan and even consider removing all tariffs, which are already at a low level on US products and import more from the US to convince Trump to take Vietnam off his list.

"Bilateral trade balances are not important (if you ask economists), but it gets into the heads of politicians and it is in Donald Trump's, so you have to treat it importantly," McCarty told China Daily.

Vietnam is among the top countries with a trade surplus with the US. The two-way trade exceeded $132 billion in 2024, with Vietnam exporting goods worth roughly $119 billion to the US, according to data from Vietnam Customs.

"You need to understand the economic logic or illogic behind these ideas (of Trump)," said McCarty. "It is really simple … he just thinks he hates Americans being taxed so he is going to make everyone not tax American goods."

McCarty said the US is "becoming more insulated and cutting itself off from the world".

Trump's Thursday memorandum is the latest in his series of moves to raise levies in line with his campaign promise to boost US industries and protect jobs. Early this month, Trump imposed an additional 10 percent levy on Chinese goods and a 25 percent tariff on steel and aluminum imports from all countries.

While ASEAN economies were not directly targeted by the tariff hikes, governments in the region are implementing policies to reduce the risk of increased trade protectionism.

Yang Wanli in Bangkok contributed to this story.

Contact the writer at prime@chinadailyapac.com.